Mulvaney Selects Chief of Staff; Lawmaker Pushes Controversy About English

On Friday House Financial Services Committee Chairman Jeb Hensarling (R-TX) announced that Kirsten Sutton Mork, the committee’s Staff Director, would be departing the committee to serve as Chief of Staff for the Consumer Financial Protection Bureau (CFPB). Hensarling said of Mork,

“As one of my longest-serving and most dedicated aides, Kirsten has been an indispensable advisor to me for the last nine years. Her leadership, deep understanding of financial policy and the legislative process, strength of character, and commitment to conservative principles have been vital to the great victories the committee has achieved for the American people during her tenure here. While I am sad to lose such exceptional talent, I know she will do an outstanding job as Chief of Staff for the CFPB and be a tireless advocate for American consumers.”

According to the announcement, Mork began her career as finance assistant for then-candidate Peter Roskam of Illinois during his 2006 campaign, later serving as a Legislative Assistant covering financial services issues for Congressman Roskam and then Congressman Tom Price from 2007-2009. Mork served in Hensarling’s personal office as Financial Services Policy Advisor and then Legislative Director from 2009-2013 before being appointed as the Financial Services Committee’s Deputy Staff Director in 2013. She has been Staff Director for the committee since early 2017.

This occurs amidst one lawmaker’s call for a probe into how Leandra English — who held the Chief of Staff position until mid-November of last year when she was promoted to Deputy Director by departing Director Cordray — got that job in the final days of the Obama Administration. 

On November 29, 2017, Sen. Ron Johnson (R-Wis) sent a letter to the Office of Personnel Management (OPM), outlining this:

From January 3, 2016, until January 7, 2017, Ms. English was a political appointee in the Obama Administration at OPM, working as the Principal Deputy Chief of Staff for the Office of the Director.  After receiving approval from OPM, Ms. English converted on January 8, 2017 from her political appointment at OPM into a career position at CFPB, a conversion that came with a salary increase of over $11,000.  Ms. English has not remained in the role for which OPM approved a conversion and instead was tapped by CFPB to play several different roles.  Ms. English’s first position at CFPB after her political conversion was as Chief of Staff for the Chief Operating Officer at CFPB.  From January 8, 2017 to November 24, 2017, however, Ms. English assumed different leadership roles at CFPB, including Chief of Staff for CFPB.  In summary, after the election of President Trump but before his inauguration, Ms. English successfully turned a political appointment by President Obama at OPM into a career position at the CFPB through the approval of the then-Acting Director of the OPM, to whom she served as the Principal Deputy Chief of Staff.

On Thursday of last week, Johnson escalated his concerns to the Office of Special Counsel:

“Based on the information that [the Office of Personnel Management] provided to the Committee, it may be appropriate for the Office of Special Counsel to review whether the conversion of Ms. English from a political appointment at OPM to a career position within CFPB adhered to the merit system principles.”

He referenced a process called “[burrowing], a practice in which a non-career, political appointee converts to a career position outside of competitive hiring processes.” He added,

“Burrowing threatens to undermine the merit-based principles that serve as the foundation of the civil service because it allows political staff to be favored over potentially more qualified candidates. The Office of Special Counsel is charged with investigating hiring decisions based on political affiliation, which is a violation of civil service laws. …According to information provided by OPM, it appears that OPM hastily approved Ms. English’s conversion in the waning days of the Obama Administration based on information that included errors, potential conflicts of interest, and insufficient independent verification.

…In reviewing the case file, [OPM’s Agency Compliance and Evaluation office] found two documents placed the position there [in the Office of the COO] in error rather than in the Office of the Director, which is the correct location of the position. While OPM asserted that the mistake “did not affect OPM’s substantive review and determination,” the documentation was subsequently demonstrated to contain errors. The CFPB only amended the paperwork after Ms. English’s appointment.

insideARM Perspective

Um. Isn’t the selection of Kirsten Sutten Mork for Chief of Staff pretty much the same thing as the 2016 appointment of Leandra English? It seems Mork’s entire career has been spent as a political appointee, and in fact her soon to be former boss has been named as a potential candidate to be the permanent CFPB Director. And, for that matter, wouldn’t it be fair to say that most of the senior CFPB roles had been filled by people who shared the same fundamental views about the mission of the Bureau as former Director Cordray?

I get that, technically, “burrowing” occurs when one’s political position is about to end and one takes a position that a civil servant usually would hold. So, English might be burrowing because her political position at OPM was ending in weeks (as Obama would be leaving office), while Mork technically would not be burrowing because her political position was/is not ending imminently. Perhaps as a technical matter, it is also relevant that English was a political SES (Senior Executive Service) at an agency while Mork was a political appointee on the Hill.    

Nonetheless, maybe it’s because I have never been a civil servant, but I am lost in the technicalities here. And from a practical standpoint, I wonder about the limited liklihood that – in Washington especially – one could identify enough senior people who are 100% free of political affiliation… Not so much because everyone is politically motivated, but because talented people find their way into a range of jobs over the course of a career. Must a political appointment disqualify someone from ever taking a civil service job in the future?


Mulvaney Selects Chief of Staff; Lawmaker Pushes Controversy About English

Bringing Common Sense to Collections

By the stroke of a pen in Kraus v. Professional Bureau of Collections of Maryland, Inc., Case 17-CV-3402 (E.D.N.Y. November 27, 2017), a senior judge presiding over the U.S. District Court for the Eastern District of New York, I. Leo Glasser, recently brought common sense to the application of the Fair Debt Collection Practice Act (“FDCPA” or “Act” or “Statute”), a federal law that governs collections. The FDCPA was enacted by Congress to provide consumer debtors with a shield against unscrupulous practices of debt collectors, and not to hand debtors a sword that can be used to obtain relief from debts that they have incurred. Unfortunately, many debtors, their counsel, and courts have strayed far from that Congressional purpose, and too often the Statute has been put to illegitimate use. Now this senior federal judge has called out the misuse and abuse of the Statute and denied relief to a debtor whose only apparent reason for bringing a FDCPA claim was to avoid payment of a just debt.

[Editor’s note: insideARM previously published this article, by Katie Neill, of ARS National, about the Kraus case. This post by Jeffrey Schreiber offers additional relevant background and commentary.]

Legislative history of the FDCPA

Effective March of 1978, the FDCPA, 15 U.S.C. 1692, et seq., was enacted by Congress. Prior to its enactment, Congress found that “debt collection abuse by third party debt collectors [was] a widespread and serious national problem.” S. Rep. 95-382, at 2 (1977) reprinted in 1977 U.S.C.C.A.N. 1695, 1696. The purpose of the Statute is to “protect consumers from unfair, harassing, and deceptive debt collection practices without imposing unnecessary restrictions on ethical debt collectors.supra. Unfortunately, by interpretation, various courts have expanded the Statute inconsistent with the spirit, if not the letter, of its legislative history. 

The declared purpose of the Statute was “to eliminate abusive debt collection practices,” while also ensuring that compliant debt collectors “are not competitively disadvantaged.”  15 U.S.C. section 1692e. Collection abuse takes many forms, including the use of obscene or profane language, threats of violence, telephone calls at unreasonable hours, misrepresentation of a consumer’s legal rights, disclosing a consumer’s personal affairs to friends, neighbors, or an employer, obtaining information about a consumer through false pretense, impersonating public officials and attorneys, and simulating legal process 15 U.S.C. 1692e.  The Act prohibits these and other harassing, deceptive, and unfair debt collection practices.


The Committee viewed the Act as “self-enforcing” meaning that consumers, who have been subjected to collection abuses, will be enforcing compliance.  A debt collector who violates the Act is liable for actual damages as well as any additional damages the court deems appropriate, not exceeding $1,000, plus attorney fees.  The Statute provides that the court must take into account the nature of the violation, the degree of willfulness, and the debt collector’s persistence. By doing so, one can only conclude that Congress wanted Courts to consider both aggravating and mitigating circumstances.  On the other hand, a debt collector has no liability if he violates the act in any manner when a violation is unintentional and occurred despite procedures designed to avoid such violations. Congress was even handed.  It recognized that not every situation is black or white but that grey areas exist.  Consequently, based upon the legislative history, Congress did not intend the FDCPA to be a strict liability statute even though Courts have interpreted it otherwise.

Some judges have expanded the statute, sometimes inconsistent with the Act’s legislative history. An example of such an expansion is the adoption of the so-called “least sophisticated debtor” standard.  The FDCPA does not establish this standard.  Rather, it is silent. Instead, the Ninth Circuit Court of Appeals decided that, when evaluating whether language may be deceptive, “the court should look not to the most sophisticated readers but to the least.” Baker v. G.C. Servs. Corp., 677 F.2d 775 (9th Cir. 1982).  The court concluded that “the FDCPA does not ask the subjective question of whether an individual plaintiff was actually misled by a communication.  Rather, it asks the objective question of whether the hypothetical least sophisticated debtor would likely have been misled.  If the least sophisticated debtor would likely be misled by a communication from a debt collector, the debt collector has violated the Act.” Guerrero v. RJM Acquisitions LLC, 499 F.3d 926,934 (9th Cir. 2007) (emphasis added).  Hence, the least sophisticated debtor standard was born. The concept is not grounded in either the Act or its legislative history. Nevertheless, most other courts have followed the Ninth Circuit, in determining whether there has been a violation of section 1692e(1)-(16).             

There are cases against lawyers for violation of the FDCPA for mailing a validation letter that is either allegedly confusing and/or does not meet the least sophisticated consumer test. See Caprio v. Healthcare Revenue Recovery Group, LLC, 709 F.3d 142 (3d Cir, 2013); Graziano and Wilson v. Quadramed Corp., 225 F.3d 350 (3d Cir. 2000); Smith v. Computer Credit, Inc., 167 F.3d 1052 (6th Cir. 1999); Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir. 1996). There are cases proscribing a debt collector from collecting interest and fees on an unpaid balance when it is not disclosed that the balance may increase accordingly. Avila v. Riexinger & Associates, LLC, 817 F.3d 72 (2d Cir. 2016); Miller v. McCalla, Raymer Padrick, Cobb, Nichols and Clark, LLC, 214 F.3d 872 (7th Cir. 2000).  

There are those in which a FDCPA violation is alleged in “reverse Avila” cases; that is, the debt collector’s failure to disclose that prejudgment interest may be owed by the consumer. See Altieri v. Overton, Russell, Doerr, and Donovan, LLP (2017 WL 5508372); Cruz, v. Credit Control Services, Inc., 2017 WL 5195225 (E.D.N.Y. Nov. 8, 2017); Bird v. Pressler & Pressler, L.L.P., 2013 WL 2316601 (E.D.N.Y. May 28, 2013).  

There are even alleged FDCPA violations litigated because a mailing barcode, account number, partial account number, or an account number embedded in a barcode, are visible through a glassine mailing envelope. To that end, courts have debated whether there exists a “benign language exception” to 15 U.S.C. section 1692f(8), another concept fabricated by the courts.  Courts have gone both ways. See Anekova v. Van Ru Credit Corporation, et al., 201 F.Supp.3d 631 (E.D. Pa 2016); Douglass v. Convergent Outsourcing, Inc., 765 F. 3d 299 (3d Cir. 2014); Kostik v. ARS National Services, Inc., 2015 WL 4478765 (M.D. Pa July 22, 2015). 

How far have we strayed from Congress’ intent to protect consumers from “unfair, harassing, and deceptive debt collection practices without imposing unnecessary restrictions on ethical debt collectors?” How have consumers been injured by some of these seemingly technical, if not picayune, issues raised by consumer attorneys? Who has benefited most from these cases—the plaintiffs or plaintiffs’ attorneys? Judge Glasser answers these questions. The following are excerpts from his decision.

Kraus, et. al. v. Professional Bureau of Collections of Maryland, Inc.

Plaintiff, Kraus (“Kraus” or “Plaintiff”) claimed Defendant, Professional Bureau of Collections of Maryland, Inc. (“PBCM” or “Defendant”) violated 15 U.S.C. section 1692e by sending her an offer to settle her debt for 40% of her account balance. The letter provided the amount owed on her account. It, however, did not state that the account balance might increase due to interest or other charges if not timely paid. In Avila, the Second Circuit held that a debt collector violates section 1692e if it notifies a consumer that an unpaid account balance may increase due to interest and fees if not timely paid. Avila, however, also provides a safe harbor for a debt collector who fails to disclose that interest or other charges may increase the outstanding balance. A letter that contains language stating “that the holder of the debt will accept payment of the amount set forth in full satisfaction of the debt if payment is made by a specified date” is exempt. So, the issue before the Kraus court was whether Avila applied to the letter and, if so, whether the settlement offer in the letter brought Defendant within the safe harbor of Avila. The Kraus Court found that Avila applied to the letter but that the letter fell within the safe harbor. 

Judge Glasser questioned what the alleged harm was in this case. He observed that tort law, for example, teaches the violation of a statute will subject the violator to liability if the person harmed is a member of a class the statute was designed to protect, and the harm complained of is the harm the statute was designed to prevent. As to harm, the Statute’s enacted purpose was to eliminate abusive debt collection practices. See 15 U.S.C. section 1692e; S. Rep. 95-382, at 2 (1977). The judge rhetorically asks,

“Where is the abuse here? The court sees none.”

At oral argument, the judge asked Ms. Kraus’ lawyer why her client brought this case? Her lawyer responded because she is in financial distress. Kraus did not seek an attorney because she felt abused, deceived, or otherwise aggrieved. Rather, she did so because she wanted help getting out of debt. Judge Glasser firmly stated that “the FDCPA is not a debt-relief statute and courts should not indulge thinly veiled attempts to use it as one.” Id. at 14.  He wrote:

Sadly, abuse of the statute is unsurprising given the development of the law in this area, and the Court suspects such abuse is fairly widespread.  In 2006, the Court observed that the interaction of the least sophisticated consumer standard with the presumption that the FDCPA imposes strict liability has led to a proliferation of litigation in this district…Since then, the number of FDCPA cases filed yearly in this District has more than quintupled.  And small wonder, when all required of a plaintiff is that he plausibly allege a collection notice is “open to more than one reasonable interpretation, at least one of which is inaccurate. Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993).  This standard prohibits not only abuse but also imprecise language, and it has turned FDCPA litigation into a glorified game of “gotcha,” with a cottage industry of plaintiffs’ lawyers filing suits over fantasy harms the statute was never intended to prevent.  With Avila, the circuit’s FDCPA jurisprudence lurches to ever more plaintiff-friendly terrain.  Kraus, supra at 14-15 (emphasis supplied).     

Judge Glasser questioned whether these cases describe genuine instances of debt collection abuse.  He is concerned that debt evasion is being facilitated for the purpose of increasing profits among the plaintiffs’ bar. Kraus supra at 18. Congress intended that the FDCPA would provide a shield against the overly zealous debt collector. By carrying the least sophisticated debtor standard and strict liability concepts to illogical extremes, “Courts have fashioned this shield into a sword” inconsistent with the Congressional intent of the Statute. Id.


For decades since the FDCPA’s enactment, federal courts have bent, distorted, contorted, misinterpreted and otherwise mischaracterized the statute, usually for the benefit of the consumer, even where no measurable damage has been sustained. This is, among other reasons, why the Kraus case is an oasis in a desert of federal cases finding the defendant debt collector liable for an alleged (if not dubious) FDCPA violation even where the debtor has not sustained any injury. Maybe the Kraus case signals the pendulum swinging toward a more common sense, judicial interpretation of the Statute consistent with Congress’ intent. Hopefully, hereafter, courts will apply the FDCPA to serious abuses in accordance with Congress’ intent and dismiss specious or implausible cases. At a minimum, plaintiffs with ulterior motives, such as seeking debt relief by suing under the FDCPA, should no longer be tolerated.

Bringing Common Sense to Collections

IACC Member Survey Reveals Chief Concerns for 2018

MINNEAPOLIS, Minn. — A recent survey of International Association of Commercial Collectors’ (IACC) members reveals finding new clients to be a chief concern, followed by the impact of the economy and new regulations, but for most the outlook is bright for 2018. 

Problems that keep me up at night

For all business owners — and supervisors for that matter — there are always problems, headaches and concerns to deal with. A recent survey of members of the IACC showed the one issue of most concern – that “keeps them up at night” – is finding new clients.

Survey respondents were asked to respond to different issues based on three categories: Client Cultivation, Angst over the Unexpected, and Recruitment & Retention. They responded to questions based on whether the given issue “most concerned them,” making them toss and turn at night; “occasionally concerned them,” bothering them but not on a consistent basis; or was simply “not a problem.” There was also a “not applicable” response.

For the “Most Concerned” category, an overwhelming 51.56% of the 64 respondents said that finding new clients kept them up at night, followed by 21.88% saying the economy and its impact on commercial collections was a major concern. Regulations that could make the job more difficult was a major concern to 18.75% of those who responded to the survey. 

Issues that are of concern but not all the time

Of the respondents ranking issues that were occasional concerns, though not consistent ones, 62.5% said the impact of the economy was a concern, and, interestingly, there was a three-way tie – at 57.81% — between respondents indicating that regulations which could make the job more difficult, managing unreasonable client expectations, and training staff to succeed were occasional yet inconsistent concerns for them.

No problem at all

Issues that did not seem to concern survey respondents included keeping headhunters away from a business’ top collectors (68.75%), the impact of bitcoins on commercial collections (57.81%), and concerns that bad publicity could befall the organization or the commercial collections industry in general (45.31%). 

But what else do you worry about?

When asked, “What else keeps you up at night?”, in addition to the specific responses included in the survey, respondents’ answers largely had to do with the topics of clients, regulations, staffing and the legal aspect of the business. Though a few responded that old age and a snoring dog were primary concerns.

One respondent replied, “We do have some clients that delay our fee payments for a very long time and we have communication problems that make it difficult to make our clients understand the legal procedures in different countries.”

Dealing with demanding clients, maintaining the existing client base, and finding and cultivating quality clients that move the growth curve were other issues raised by survey respondents. New regulations, and concern over the current regulatory climate and practices and their effect on commercial collection businesses were also mentioned numerous times.

Regarding the legal aspect of the commercial collections field, one respondent called out debtor lawyers and lawyers looking to take advantage of the system, as well as poor administration in the courts and unreasonable opposing counsel as major issues within the industry.

One respondent wrote, “For the last 20 years, agencies have beaten each other up with rates, and the resulting rate pressure created by agency sales representatives’ desire to land an account leads to regular reductions in the rates offered by attorneys.

“Seriously, how much longer can quality law firms stay in business with rates on commercial claims averaging below 20%? And who started the trend of sending out claims at the same rate no matter where the law firm is located?” the respondent continued.

In addition, respondents said that having “staff that never seems contented,” hiring “top flight talent,” and not having enough time for staff to process files as quickly as necessary were regular concerns as well. 

Over 45% of respondents have been commercial collection professionals for more than 30 years while only 4.69% have been in the industry for between one and five years. Members of IACC for over 30 years were 9.52%, while 25.4% have worked in the field for between one and five years and between five and 10 years.

Benefits of IACC membership that members listed most often included networking opportunities,  collector and agency certifications, and keeping staff focused through the seminars they provide.

One respondent wrote, “IACC keeps me informed on current trends and in touch with our competition, which is very helpful since IACC members are so honest with each other.” 

Perhaps the most striking – and best – news to come out of the survey was that looking forward to 2018, 59.38% of respondents expect their business to increase while only 1.56% said they thought business would decrease in 2018. 

About IACC

The International Association of Commercial Collectors, Inc. (IACC) is an international trade association comprised of more than 350 commercial collection agencies, attorneys, law lists and vendors. With members throughout the U.S. and in 25 international countries, IACC is the largest organization of commercial collection specialists in the world. The IACC contributes to the growth and profitability of its members by delivering essential educational and professional tools and services in a highly collaborative and participatory environment. For more information, visit

IACC Member Survey Reveals Chief Concerns for 2018

MRS BPO, LLC Acquires Alabama-based Vantage Sourcing

CHERRY HILL, N.J. — New Jersey-based debt collection agency MRS BPO, LLC, one of the country’s premiere accounts receivable management firms, announced that it has acquired Vantage Sourcing, a call center company focused in collections and customer service, located in Dothan County, Alabama. The purchase will enable MRS continue to expand through additional seat capacity and new client vertical industries. 

“Acquiring a quality organization like Vantage helps to forward our growth objectives and offer additional services,” said Chief Customer / Growth Officer Chris Repholz. “The integration of the two companies will begin immediately and clients of both companies will continue to receive the great quality and results to which they’re accustomed.” 

Vantage Sourcing was founded in 2004 by Scott Stanford and Derrick Willman and has been an active employer in Dothan since that time. “The Dothan area has a population that is eager for full time jobs which offer benefits and advancement opportunities,” commented Co-CEOs Saul and Jeff Freedman. “Our intention is to become an employer of choice in the area and we greatly look forward to making a positive impact in the community.” 

The acquisition provides MRS with a third domestic contact center location with 200+ seats and customer service clients that complement its collections business. “We are very excited about Vantage Sourcing becoming part of the MRS family,” said Vantage CEO Scott Stanford. “We have similar cultures and I know that Dothan is going to appreciate the new jobs and career growth that MRS will bring as part of this acquisition.” 


MRS BPO, LLC is a full service accounts receivable management firm headquartered in Cherry Hill, New Jersey. The company’s unique combination of experience, technology, and compliance management processes allows them to provide industry-leading debt recovery solutions while enhancing their client’s brand and reputation. For more information on MRS BPO, LLC, visit them online at

MRS BPO, LLC Acquires Alabama-based Vantage Sourcing

Mulvaney Updates CFPB Mission

Just before the holidays, as a federal judge heard arguments about whether Leandra English or Mick Mulvaney should be the interim leader of the Consumer Financial Protection Bureau (that case is still pending), Acting Director Mulvaney officially changed the Bureau’s mission statement.

Here’s what it was under Director Cordray:

“The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”

Here’s what it is now:

“The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives.” (emphasis added)

What’s new here is the concept of identifying unnecessary or burdensome regulations — one we’ve heard from President Trump in his earliest days in office — and a change in enforcement focus from CFPB rules to “federal consumer financial law.”  Oh, and the word “fair” was removed.

This change has of course made CFPB proponents, including the Bureau’s founder Sen. Elizabeth Warren, apoplectic

Meanwhile, in other recent developments that are unpopular with former CFPB proponents, Acting Director Mulvaney has: 

  • Announced new staff additions — several of them on loan from his other place of work, the Office of Management and Budget.
  • Abandoned the planned consumer debt collection disclosure survey.
  • Announced that the Bureau does not intend to assess penalties for errors in data collected in 2018, and plans to reconsider aspects of the Mortgage Data Rule.
  • Announced that the Bureau expects to issue a final rule amending certain aspects of its 2016 rule governing prepaid accounts soon after the new year.

insideARM Perspective

Some have speculated that the leadership change at the CFPB might mean that debt collection rules will never see the light of day. I’m not so sure I agree with that. There has certainly been a delay. However if the new mission to “identify and address outdated… regulations” applies to any industry, it is tailor-made for debt collection. With a law enacted in the 1970’s and a mass of conflicting court decisions, rules governing this industry need to be simpified, clarified, and modernized.

Mulvaney Updates CFPB Mission

The Affiliated Group Changes Name to The CMI Group

CARROLLTON, Texas — The Affiliated Group (TAG), based in Rochester, Minnesota, has officially changed its name to The CMI Group (CMI) effective January 1, 2018. With this change, TAG consolidates into CMI and its operating subsidiaries. CMI acquired TAG in November 2014, making it a wholly-owned subsidiary. Since that time, TAG has maintained its name, commitment to regulatory compliance, and strong performance for its customers.

CMI continues to execute its vision of an integrated organization that drives shareholder value and delivers optimal service to the verticals and customers it serves.

The Rochester, MN office continues its operations and anticipates no changes. 

About The CMI Group

CMI is a full-service receivable management firm providing leading-edge solutions to customers nationwide. Through its subsidiaries, CMI delivers innovative revenue cycle, accounts receivable management, and BPO solutions resulting in enhanced operational efficiency and increased revenue for its customers. Founded in 1985 and serving a multitude of industries, CMI has headquarters in Carrollton, TX, with satellite offices in Dallas and Rochester, MN. For more information, visit

The Affiliated Group Changes Name to The CMI Group

Integrated Vendor Partnership Helps Hospitals Manage Patient Self-Pay Challenge

The following is a discussion I had with Manoj Chabra, CEO, DCS Global and Ed Caldwell, Chief Revenue Officer at CarePayment about the integrated vendor partnership they began in 2017, and how they are helping healthcare revenue cycle professionals adapt to the new patient (or self)-pay dynamic.

The partnership between CarePayment and DCS: What does it say about the self-pay crisis?

It says the self-pay healthcare crisis isn’t on a trajectory to improve, and any serious effort to change that trajectory is going to require focus. Everyone has skin in the game, especially hospitals and physician practices that are facing disappearing margins.

If more people lose healthcare, the problem is only going to get worse. In any event, we think the right focus is patient engagement. It’s proactive, it’s positive, and it empowers patients by educating them on their choices. It ultimately makes them loyal patients, and repeat patients. Satisfied patients tend to figure out a way to pay their bills.

Has behavioral science played a role in your business model?

You can’t understand the healthcare revenue cycle without taking human behavior into your calculus. Only recently has anyone had the data to back up what we’ve known anecdotally for a long time: Getting people to make payment arrangements is a matter of driving the right conversations, to the right patients, at the right time.

Will vendor fatigue keep healthcare providers from offering patients more ways to pay for healthcare?

From a provider perspective, having one vendor figure out a patient’s propensity to pay at the top of the rev cycle, and then having a different vendor, if any, step into the patient financing and collections portion of the lifecycle—it’s a lot to manage. Providers want end-to-end help with patient financial matters. They’re clinicians, and for them, vendor fatigue is very real.

The hospital systems probably have no choice; to stay open, they’ll all have to think about how they’re going to offer patient financing beyond a four-month duration. So they’ll likely engage vendors for that, so they can stay efficient and keep a focus on clinical care. By integrating CarePayment with DCS, we’re hoping to provide the market with a solid, integrated choice.

What did DCS add to what CarePayment was already offering in the marketplace?

There’s a whole early-cycle experience patients can ideally have, and it hinges on good estimates of a propensity to pay, as well as good transparency for the patient about her estimated patient responsibility. When a patient goes for care, they may not be in a position to really face the financial aspect of the encounter. DCS takes the opportunity to profile the patient based on their past payment behaviors, using a soft hit on their credit files. The financial counselor then has a set of materials, tailored to that patient, that makes them aware of their payment options at the point of service. If they’re not able to take action on one of those payment choices up front, they’re offered a CarePayment plan.

Essentially, DCS added a robust and very sophisticated tech-enabled on-ramp for patients. It’s a nice workflow that triages the patients and quickly identifies various work streams that providers need to take to maximize their collection efforts. Providers weren’t doing this very well—this up-front work of identifying those patients that can and will pay their balance up front either in full or with a prompt-pay discount. Those who can’t pay in full, and are facing an out-of-pocket expense they can’t fund all at once, those patients have an opportunity to work with CarePayment.

Will these sorts of vendor partnerships get more prevalent?

We think so. One, the issue of becoming effective at collecting outstanding balances from patients is going to keep accelerating. The pressure is getting more and more intense. Hospitals and physician ecosystems are simply not geared to collect from patients. They don’t have people, processes and technology to collect from thousands of patients. Integrated partnerships between complementary vendors will help make things simpler for providers.

Are there any regulatory implications of your business model?

Of course, the CFPB does treat any payment arrangement of four payments or more as a lending environment. While no one is exactly policing that right now, that is bound to change and once it starts, it will be like wildfire. So yes, there is regulatory risk, and it’s going to grow. This is why vendors that are not making a significant investment in their compliance function will not survive. In the healthcare space, we of course also have IRS 501(r) guidelines. So, overall, we definitely see the regulatory environment as a market issue and we’re monitoring it very carefully as it develops.

Do you see CarePayment and DCS changing the patient finance and revevenue cycle game?

It’s clear that this market is evolving fast. There are many new entrants working to solving the patient finance and revenue cycle issues hospitals and providers are facing—and they often don’t have—the healthcare specialization track record and background to fully understand the issues. So we are uniquely positioned. Our work has the potential to cause a tidal change in financial behavior.

It’s easy to change the behavior of those who want to have their behavior changed. We have to start addressing financial literacy at the beginning of the patient journey. We recognize that the revenue cycle has long been a business-to-business conversation. With the patient-as-payer reality, we are helping hospitals change that. Unless you’re going to provide finance options to all patients, you’re not trying to change the game. We’ve all seen that a patient in the middle of a clinical encounter may not be ready to talk payment arrangements until later in the rev cycle, and we’re prepared for that moment when they are more ready.

Do you think providers and their collections teams have been missing a critical moment in the patient financial lifecycle?

Providers don’t traditionally have a great engagement strategy to reach patients 60-75 days after the clinical encounter, when they are most likely to be struggling with the reality of the bill, and most prone to accept new information about their payment options.

We’ve done a lot to analyze collection activity and subsequent success of providers (prior to a CarePayment engagement) and what we know is that a provider is going to bill a patient for 120 days. We routinely see that they’re going to collect 80% of what they are ever going to collect in the first 60 days. And between days 61-120, they’ll virtually not collect anything more. So when they engage us, we take over an educational phone call and outreach to let the patient know “Hey, we know you owe $2,000 and we want to make sure you knew that your provider is subsidizing a program that will allow you to pay over time, at zero percent interest, etc…” We catch them in that critical window and use an opportunity—one that is typically wasted—to engage them.  

From a data perspective, there are definitely moments in a patient’s financial journey that are more or less ripe for outreach. This is a key value we add to the provider rev cycle capture.  Many patients are not ready to deal with the financial matters exactly when providers are, but when they are ready, we want to be there to capture the benefit of that receptivity. A full 80% of the cash we drive is captured in this “second-chance” period. It can’t be wasted!  

What was DCS focusing on before patients became such a huge payer demographic?

We were tracking insurance companies to see how they paid on claims, and forecasting outcomes for the revenue cycle. With the landscape changing, we pivoted and now we track patients to learn more about how they behave, and how we can best motivate their behavior. DCS was finding the same gaps in the revenue cycle that CarePayment was: Hospitals can’t really offer payment options more than four months in duration. This kept them between a rock and a hard place. The insights DCS provides can bring hospitals a level of insight about propensity to pay that’s very valuable in making the most of the patient journey.

What do you think the future holds for the hospital revenue cycle?

I see tighter vendor integration in the nearing future. Qualifying for extended healthcare financing should be like it is in the auto loan industry: Patients should be able to see in minutes whether they’re approved for certain options or not. Tech moves fast, but the truth is, business and regulatory drivers set the pace.

There are many ways we can improve looking forward. Further to patient education, I’d like to work on helping patients truly understand their bills. We want them fully knowing why something is subject to deductibles, or why their co-insurance calculates out a certain way. We need help from insurance carriers to provide better transparency to patients. It’s happening, but it’s happening slowly.


DCS Global is a software solutions firm specializing in healthcare process improvement and information management. DCS Global provides an integrated suite of solutions for Patient Access/Revenue Cycle and Patient Experience in a single source environment, iPAS, which allows for lower cost of ownership. iPAS provides seamless patient access workflow, paperless operation and advanced data analytics to our provider partners. Our suite of product helps hospitals get paid in a timely manner. iPAS includes front end and back office revenue cycle tools like order manager, authorization, eligibility, payment, e-Forms and e-Signature, patient payment estimation, patient tracking, claim status and denial tracking. iPAS is HFMA peer reviewed and is also ranked by KLAS.

CarePayment is a patient financial engagement company that accelerates providers’ transition to the new consumer-driven healthcare market. Powered by advanced technology and analytics, our innovative patient financing solutions improve patient satisfaction and loyalty while delivering superior financial results. By partnering with healthcare providers to make affordable financial options available, CarePayment helps patients get the care they need, when they need it, while protecting the financial health of provider organizations so they can continue to offer valuable care to the community. CarePayment’s patient-friendly financing is compliant with applicable state and federal consumer credit laws, requires no application, and is supported by a friendly US-based customer service staff. Accounts for the program are issued by Republic Bank & Trust, Member FDIC.


Integrated Vendor Partnership Helps Hospitals Manage Patient Self-Pay Challenge

CFPB Credit Card Market Report Addresses Collections and Recovery

Just before the holidays the Consumer Financial Protection Bureau (CFPB or Bureau) released its latest Consumer Credit Card Market Report. You can see the full report here.

This report is mandated (every two years) by the Credit Card Accountability Responsibility and Disclosure Act (“CARD Act” or simply “Act”), passed by Congress in 2009. With the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, that requirement passed from the Board of Governors of the Federal Reserve to the CFPB.

Chapter 8 of the 352-page report covers the debt collection market. The report states that the Bureau surveyed “a number of large credit card issuers in order to understand current practices and trend, as well as to identify changes to internal policies in the credit card and debt collection and recovery arena.” It does not state how many creditors participated, however the report does note that none of those who responded allow third-party agencies to credit report; they do it themselves. 

Some of background highlights:

  1. Approximately one in eight debt collection complaints between January 1, 2015 and December 31, 2016 identified a credit card as the source of the debt.
  2. Debt collection industry revenue has declined in recent years, falling from about $13.3 billion in 2012 to $11.4 billion in 2016.
  3. Creditors employ around 300,000 collectors to work initial delinquencies, while the much smaller third-party collection industry employs approximately 125,000 (a reduction of nearly 10,000 jobs in the past two years). The source of this data is noted as IBISWORLD.
  4. The net credit card charge-off rate for all commercial banks rose from 3.8% in the second quarter of 2015 to 4.9% in the second quarter of 2017. Charge-off rates declined from an all-time high of 16.3% in 2010 to 4.3% in 2016. 

Highlights from the survey responses:

In-House Collections

  • Contact attempts: In general, issuers’ actual average contact attempts tended to fall well below policy maximums. Daily contact attempt limits ranged from three calls to as many as 15 per account. See table below.
  • No issuer allowed calls to continue within a given day once “right party contact” has been made.
  • Right party contact rates typically fell between 3% and 7% for in-house and first-party collections and between 0.5% and 2.0% for third-party collections over a three month period.
  • In general, issuers’ average daily number of contact attempts via telephone fell between 1.5 and 3.5.
  • Most issuers restricted the number of voicemails that can be left for a consumer each day. Among those that do so, nearly all allowed no more than one voicemail per day.
  • Nearly all of the issuers surveyed used email as a part of their credit card collection strategy. Conversely, less than one-third of issuers surveyed employ mobile text messages to communicate with delinquent consumers.

CFPB 2017 Credit Card Market Study-Debt Collection Table 1

First-Party Collections

  • Nearly all of the issuers that use first-party collectors prior to charge-off noted that they do not “place” specific accounts with first-party agencies. Instead, they allocated work between in-house and first-party collectors throughout a given day. Therefore, if available resources have shifted, a single consumer account could be handled by both in-house and first-party agents within the same week, day, or hour.
  • From 2015 to 2017, the surveyed issuers increased the total number of unique first-party agencies by 36% to 15 total agencies.
  • Those issuers that used first-party agencies used three different agencies on average.
  • A majority of the issuers surveyed required that first-party agents place, receive, and document calls to consumers using the issuer’s own case management system and dialers. In general, first-party collection agents were contractually bound to abide by the issuers’ consumer contact limit policies.

Third-Party Collections

  • More than half of the surveyed issuers worked with third-party contingency collectors.
  • The number of unique collection agencies used across issuers remained steady between 2015 and 2017, with 30 unique agencies in 2015 and 31 in 2017.
  • The percentage of delinquent accounts placed with third-party agencies prior to charge-off dropped from 8.3 in 2015 to 7.9 in 2016.
  • The average number of third-party agencies used by each issuer was seven in 2015 and eight in 2017.
  • Contingency fees ranged from 6.4% to 24% in 2015 and 7.2% to 24% in 2016, with the variation being attributed to the risk profile of the accounts being placed.

Pre-charge-off loss mitigation strategies

The report addresses a range of strategies used by issuers, including re-aging accounts, short and long-term forbearance programs, debt settlement, and debt management plans.

  • Re-aging returns a delinquent credit card account to current status without collecting the balance due. Issuers may perform a re-aging in order to assist customers with temporary cash flow issues. The quarterly re-aging average ranged from as low as 0.6% of total delinquent dollars to a maximum of 4.5%. Average re-aged balance was $660 million per quarter, with an uptick noted in the fourth quarter of 2016 due to the recent increase in credit card delinquencies.
  • Forbearance is designed to help those borrowers with longer-term financial hardship. Most of those surveyed offered one or more of these payment programs, typically consisting of a fixed payment amount over a specified period of time, and often at a reduced interest rate. New enrollment rates among the individual issuers ranged from low of 0.6% to a high of 5.3%. Forbearance inventory showed a 30% reduction from the first quarter of 2015 to the first quarter of 2016.
  • Debt settlement programs are those in which an issuer agrees to accept less than the full balance owed as full satisfaction of the balance owed. Generally, pre-charge-off loans are settled with a single lump-sum payment or multiple installments. The installments typically consist of three payments, but the total duration is not to exceed 90 days. The portion of the balance that is forgiven should generally be charged off when the settlement agreement is fulfilled. Post charge-off settlements can be structured over any length of time.

Post charge-of recovery strategies

In general, the survey found that:

  • The majority of issuers used third-party agencies throughout the entire review period
  • The majority of issuers engaged in internal recovery
  • The majority of issuers engaged in post-charge-off litigation
  • The minority of the issuers sold debt
  • All issuers warehoused a portion of their account balances 

insideARM Perspective

Given the context of potential debt collection rulemaking, it is also interesting to note that the report addresses communication with consumers. This is a very hot topic from an industry perspective, with many asking the Bureau to update and clarify the law regarding modern methods of communications. 

Most issuers reported that they accommodated special requests for limited cease communication requests, such as stopping communications at a particular time of the day or day of the week. A few issuers accepted requests to cease communications in certain channels (e.g., requesting the issuer cease making phone calls but permitting emails, letters, and text messages). Total balances in pre- and post-charge-off inventory with requests to cease communication grew significantly in recent quarters for most issuers. The year-over-year growth in account balances with these requests ranged from 5% to 44% among the surveyed issuers.

Also worth noting is the description that issuers are able to manage multiple accounts with the same consumer at once; 75% of those surveyed said they bundled accounts and handled them during a single call to the consumer. The report states that most of the issuers surveyed did not have a similar approach to bundling post-charge-off debt, with only 25% placing all of a consumer’s charged-off accounts with the same third-party agency for collections. From the perspective of consumer-friendliness, bundling accounts is a distinct benefit – it reduces the number of contacts necessary, and minimizes hoops a consumer has to jump through to designate preferences.

Additionally, benefits of the bundling strategy to the creditor include:

  • Ability to negotiate repayment on the accounts in the customer’s bundle that are most advantageous for the issuer to mitigate the loss.
  • Allows for higher account-to-collector ratios as a result of multiple accounts with one customer being counted as one account for the purposes of a call.

On the other hand, there are some challenges for issuers, incluing:

  • Finding ways to link accounts based on common identifying criteria.
  • Bundling at the customer level on the system of record, for purposes of pushing a single account representing all to a dialer or other channel.

CFPB Credit Card Market Report Addresses Collections and Recovery

SWC Group Donates More than $1,100 to Ronald McDonald House Dallas

DALLAS, Texas -– SWC Group selected Ronald McDonald House of Dallas (RMHD) as their third quarter 2017 Charities of Choice. Employees from their Carrollton, TX office volunteered to prepare and serve breakfast for families staying at the Dallas house, and raised a total of $1,105 in donations.

“It costs RMHD approximately $125 per night to host a family, but they only ask families to contribute $15 night and will not turn anyone away who cannot pay,” says Jeff Hurt, CEO. “We choose to continue supporting RMDH in their mission, so they may continue to provide opportunities of closeness for families and their loved ones.”

Employees were separated into teams and competed to see who could raise the most money. Team members coordinated a number of different fund raising activities throughout the company floor. The team who raised the most money was awarded a paid volunteer day in order to serve lunch to the families at the RMHD.  The winning group, the administrative “Consumer Account Resolution Team” selected the menu and submitted it for approval.  On November 22, 2017 the team purchased, cooked and served the food, and cleaned the kitchen afterwards. It was a great team building experience for SWC Group employees.

“RMHD does great work to help out our local community and we are honored to donate funds for them, and thankful for the opportunity to serve those families in need,” says Hurt. “We look forward to volunteering with them again.”


About SWC Group

SWC Group is one of the nation’s leading providers of accounts receivable management and consumer service solutions.  They bring over 40 years of proven experience in the government, tolling, utility, telecommunications, cable, property management, and education industries. SWC Group annually manages billions of dollars in receivable accounts, proudly serving organization of all sizes from Fortune 500 private firms to small public agencies.


SWC Group Donates More than $1,100 to Ronald McDonald House Dallas

FDCPA Caselaw Review for November 2017

insideARM maintains a free FDCPA resources page to provide the ARM community a destination for timely and topical information on the Fair Debt Collection Practices Act (“FDCPA”). This page is generously supported by TransUnion. See the page here or find it in our main navigation bar from any page on insideARM under Compliance Resources.

The centerpiece of the page is a chart of significant FDCPA cases. Case information and analysis is provided by Joann Needleman, a Clark Hill attorney and leader of the firm’s Consumer Financial Services Regulatory & Compliance Group. Click on the link in the chart for the complete text of the decision. Where insideARM has already published a story on the case, we provide a link to the story.


Here’s a rundown of just some of the FDCPA cases in the spotlight as 2017 draws to a close.

Rhein v. Forster, Garbus & Garbus, LLP

The gist: A settlement letter did not provide details on potential tax consequences of taking a settlement offer. The court determined that this failure alone is not sufficient to state a claim under the FDCPA.

Richard Leonard V. Zwicker & Associates, P.C.

The gist: Circuit court affirmed dismissal of a class action based on an allegation that the collector did not identify a creditor’s full business name. In this case, the letter identified the creditor as American Express, which court felt was sufficient.

Bernal v. NRA Group, LLC

The gist: This bench trial centered on whether creditor’s legal counsel expenses can be considered “costs,” eligible to be collected from a consumer. Turns out, the creditor’s contract specifically provided that consumer would pay all costs of collection, which made it easy for the court to side with the defendant.

McAdory v. M.N.S & Associates, LLC

The gist: This case contemplated the role of active debt collectors versus passive debt buyers. The court found that a passive debt buyer defendant was not considered a debt collector, since it had no interaction with consumers and did not directly engage in collection activities.

Macelus v. Capital Collection Service

The gist: Court found that a dunning letter sufficiently identified the defendant as the current creditor even though both the creditor medical facility and agency debt collector are both identified in the letter. While the court did not see any reason for the confusion and found the suit frivolous, it stopped short of issuing sanctions.

Frank Bandas, Plaintiff, v. United Recovery Service, L.L.C., Defendant

The gist: In this case, plaintiff alleged that a collection letter threatened litigation in stating, “We wish to make this appeal to you as one reasonable party to another. Send us your full payment today or contact this office at once to make suitable payment arrangements so that no further procedures need to be taken in this matter.” The court agreed with the plaintiff.

Homer v. Law Offices of Frederic I. Weinberg & Associates, P.C.

The gist: In this case bound for the appellate division, a validation notice that began with, “unless we hear from you” was found to have implicitly confused and shortened the time period that a least sophisticated consumer would normally have to dispute a debt. In addition, the court found that this language overshadowed the validation notice. Court noted that section 1692g is susceptible to two interpretations—one that a debtor may dispute the debt orally, and the other that he may dispute it either orally or in writing. Since this can cause confusion for a consumer about his rights, the third circuit has found that mirroring statutory language does not excuse the debt collector from explicitly advising consumers that a dispute must be in writing to be valid.

Arias v. Gutman, Mintz, Baker & Sonnenfeldt LLP

The gist: In this case, a law firm garnished a consumer’s bank account to satisfy an outstanding debt. The consumer’s bank noted that some of the consumer’s funds were subject to exemption from garnishment, and the debtor filed an exemption, to which the law firm objected. At the state court level, the law firm withdrew its objection and released the account. However, the consumer filed suit, claiming that the law firm’s objection was false, misleading and unconscionable. The lower court dismissed the case, finding that the law firm was not in violation of state law. Later, the second circuit reversed on that decision, holding that the law firm had no good faith basis for its objection, and that its actions would mislead a “least sophisticated consumer” even if it did not mislead this consumer.

Nieasha Thomas v. Midland Credit Management, Inc.

The gist: In this case, the plaintiff received a collection letter stating that the interest on her outstanding debt was $0.00, leaving her in doubt about whether or not interest was accruing on her debt. The court ultimately found that the consumer had a claim, and the right to know whether interest would accrue on the account into the future.

FDCPA Caselaw Review for November 2017